Be fundable before seeking funds

A growing gap

The 2025 report by the SME Finance Forum, part of the World Bank Group, estimated that the financing gap for micro, small and medium-sized enterprises in emerging and developing economies rose from USD 4.4 trillion to USD 5.7 trillion between 2015 and 2019, an increase of 27%, and that as a share of GDP it widened from 17% to 19%. Women-led businesses account for 34% of that gap. Latin America and the Caribbean was one of the two regions where the formal supply of financing to MSMEs contracted, by about 4% per year over that period (SME Finance Forum).

The usual reading is that there is a shortage of funds. That is partly true. But in our work with companies and business development programs we see another side of the problem: many companies are not prepared to receive financing, even when it exists.

What a funder looks for

A bank, a fund, an investor or a public call for proposals evaluates, with different emphases, the same questions. Does the company have reliable financial information? Does it have a business model that generates or can generate cash flow? Does it have a clear plan for using the resources and a quantified expected impact? Does it have governance that ensures the resources will be used as promised? Does it have a team capable of executing?

Companies that cannot answer these questions with evidence are left out, however good their idea. That is why, in our work, we talk about a bankable plan: a plan with figures that a funder can evaluate and approve.

Readiness is a process

In designing a business-strengthening program for an industry association, investment readiness emerged as an advanced stage of a longer process. The research showed that many companies first needed to consolidate their financial sustainability and local operations before seeking expansion or capital. Trying to connect companies that still lacked basic financial information with investors would have frustrated both sides.

The model we built with the association organizes support in phases: diagnosis and characterization, capability development, implementation and activation, and scaling. Investment readiness and the management of financial partners sit in the last phase, when the company has the maturity to take advantage of them. Segmenting companies by maturity makes it possible to offer each one what it needs at the right time.

National funds and calls for proposals

In Colombia there is a broad range of public funds, cooperation programs, calls for proposals from large companies and entrepreneurship competitions. Making the most of them depends on three capabilities many companies and social organizations lack: identifying the relevant calls, preparing solid applications and meeting the reporting obligations after receiving the funds.

Benká Group takes part in calls for proposals and entrepreneurship programs with its own initiatives, and experience has taught us the same thing we observe in our clients. Successful applications share traits: a clearly defined problem, a value proposition framed from the beneficiary’s perspective, evidence of what has already been achieved, a plan with milestones and indicators, and a budget consistent with the plan. Applications that fail tend to have good intentions and little evidence.

Institutions as a channel

For institutions that support entrepreneurs (associations, universities, foundations), investment readiness is a value-added opportunity. An institution that helps its entrepreneurs become fundable multiplies the impact of every peso funders mobilize. And funders, in turn, value having a portfolio of prepared, supported companies.

In our experience, the institution’s role works best when it combines its mandate and convening power with replicable methodologies and clear prioritization criteria. A question we often hear from program directors is how to use data to prioritize whom to serve. The answer lies in characterization.

Financing with impact

A relevant trend is the growth of capital that seeks financial return and social or environmental impact at the same time. For companies and organizations with a social purpose, this opens up additional sources, but it also demands more: impact indicators as rigorous as the financial ones, and a theory of change that explains how the resources produce results.

Common mistakes when seeking funding

There are mistakes we see repeated. The first is seeking financing to cover an operational problem that hasn’t been solved: if the company is losing money because of an inefficient operation, more capital only funds more losses. The second is choosing the wrong source for the stage: seeking venture capital for a company that needs working capital, or bank credit for an idea that doesn’t yet generate revenue. The third is underestimating the time: the cycles of public calls for proposals and of institutions’ budget processes can be long and, in many cases, without advance payments, which requires a cash cushion.

The fourth mistake is treating each application as an isolated effort. Organizations that obtain funds on a recurring basis build a file of reusable information (financial statements, indicators, cases, team presentations) and a calendar of calls for proposals. Each application becomes easier than the last.

Capital and governance go together

One aspect founders often underestimate is that receiving capital changes the company’s governance. An investor asks for regular information, decision rights on certain matters and, sometimes, a seat on the board. A public funder asks for reports on the use of the resources and on impact. Preparing for those requirements before receiving the funds avoids later tensions. In our experience, companies that put their governance in order before seeking capital negotiate on better terms.